Eyebrows were raised when the Chancellor revealed the details of the Spending Review last month, not least by those who were expecting the axe to fall on the £860 million pledged to encourage us to switch to heating our homes using renewable energy through the Renewable Heat Incentive (RHI).
This scheme aims to reward households for installing renewable devices, such as ground-source heat pumps and biomass boilers, to generate heat. ‘It was a glimmer of good news,’ says Andrew Shirley, head of rural research at Knight Frank. ‘The cost of this incentive is going to be met by the Government, as opposed to end users and utility companies, so it was quite a surprise that it survived-a bit of a coup, even,’ adds Oliver Routeledge of the company’s Renewables and Energy department.
As the weather turns colder and the cost of heating bears down on us all, this initiative is worth investigating. The essence of the RHI is to encourage a move away from relying on the big utility companies, public offices and commercial and industrial sectors to ensure the Government target (12% of renewable energy by 2020) is met. It’s about encouraging private individuals-country-house owners among them-to invest capital in renewable technology in the home.
The RHI differs from Feed-In Tariffs (FITs) in two principal ways: the latter concerns electricity, not heat, and is funded not by the taxpayer, but by the end user through a series of levies put in place by electricity suppliers. The idea behind the RHI is that if you upgrade your domestic heating system from an oil-fired boiler (or another fossil-fuel-based source) to a ground-source heat pump or biomass boiler that burns woodchips, the Government will pay you per kilowatt of energy
produced. For those who have already upgraded, systems completed after July 15, 2009, will qualify for the RHI-anything installed prior to that date is outside the scheme’s scope.
‘The massive caveat to this is that the initiative is still in its consultation period [due to be completed before the end of the year], so we don’t know the answers to some questions, including what the tariff levels are going to be,’ says Mr Routledge. ‘The talk in the market is of 4p per kwh of heat produced, but we’ll have to wait until the Government has published its paper to be sure.’
As a ballpark figure, very large country houses could receive payments upwards of £60,000 or £70,000 annually if they put in a biomass boiler to supply the heating.
At this level, the technology will require a big investment up front, but for anyone who’s looking to the long term, or who feels particularly bullish on oil prices, this incentive becomes interesting. ‘We’re looking at the options across the scale, from small manor houses to large country estates, and early projections of investment against returns from savings, let alone from the incentive, are already producing attractive figures,’ says Angus Harley of Knight Frank’s country-house consultancy.
Although the idea of using renewable sources to heat our homes is relatively new in this country, we’re only just catching up with Scandinavia and Germany, where systems have been in place for far longer. This means that technology has developed so that you can install a ground-source heat pump or biomass boiler in smaller houses, as long as you can meet the necessary criteria, such as owning a garden of a suitable size.
But before you get over-excited, Mr Harley adds a note of caution. ‘It’s not a panacea, and you’ve got to look at it in combination with lifestyle changes. Some biomass boilers require manual feeding of woodchips, for example. And there is a host of ways of helping yourself reduce the costs of heating homes, including closing shutters earlier and changing lightbulbs. It’s not just a case of whacking in the biomass boiler and thinking that’s the solution to your energy worries.’
Knight Frank country-house consultancy (01488 688500); Renewables and Energy department (0117-945 2636)
